Best equipment loans in July 2024

Written by
Michelle Honeyager
Edited by
Pippin Wilbers
Jun 03, 2024
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If you run a business that needs large or expensive equipment, odds are you’ll need a business equipment loan. Heavy machinery and specialized equipment can cost far more than most businesses have in liquid funds. Luckily, equipment loans can offer reasonable interest rates and funding up to $5 million. 

Bankrate has amassed a list of the best business equipment loans. We’ve made sure to also include lenders that work with startups and business owners with bad credit. We selected the lenders based on loan requirements, unique features and availability across the U.S.

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Best for startups

4.7

Bankrate Review
Loan amount
$10k- $10M
Term: 3 - 96 months
Interest rate
4.90- 22.00%
Fastest funding
2 business days
Read our reviewArrow Right

on Bankrate

Best for low revenue requirement

4.6

Bankrate Review
Loan amount
$25k- $500K
Term: 6 - 84 months
Interest rate
Starting at 7.90% simple interest
Fastest funding
2 business days
Apply nowArrow Right

on BusinessLoans.com

Best for large amounts

4.4

Bankrate Review
Loan amount
$25k- $5M
Term: 6 - 300 months
Interest rate
Starting at 7.99%
Fastest funding
1 business day
Read our reviewArrow Right

on Bankrate

Best for equipment leasing

4.4

Bankrate Review
Loan amount
$10k- $500K
Term: 4 - 18 months
Interest rate
Factor Rates Starting at 1.1%
Fastest funding
1 business day
Apply nowArrow Right

on partner site

Best for established businesses

4.3

Bankrate Review
Loan amount
$10k- $200K
Term: 12 - 60 months
Interest rate
Starting at 6.75%
Fastest funding
Not disclosed

Best for flexible requirements

4.2

Bankrate Review
Loan amount
$10k- $1M
Term: 4 - 60 months
Interest rate
Factor rate from 1.10 - 1.36
Fastest funding
1 business day
Apply nowArrow Right

on BusinessLoans.com

Best for long preapproval period

4.3

Bankrate Review
Loan amount
$10k- $500K
Term: 12 - 60 months
Interest rate
Starting at 5.99% APR
Fastest funding
1 business day
Read our reviewArrow Right

on Bankrate

On This Page

Compare the best equipment loans in July 2024

In the table below, you can compare the best equipment lenders and their loan features, like loan amounts and credit score requirements. You can get an idea of what each lender is best for and if your business meets the minimum requirements.

LENDER BEST FOR MIN. FICO CREDIT SCORE LOAN AMOUNT MIN. TIME IN BUSINESS
Low revenue requirement 660 $25,000 to $500,000 2 years
Equipment leasing 660 Up to $150,000 2 years
Long preapproval period 600 $10,000 to $500,000 Startups eligible
Large amounts 600 $25,000 to $5 million 1 year
Flexible requirement 550 $10,000 to $1 million 2 years
Startups 550 Up to $10 million 6 months
Established businesses Not disclosed; 700 for other loans From $25,000 2 years

A closer look at our top equipment loans

If any of the above lenders potentially meet your funding needs, take a closer look at them below. We’ll cover general information about lenders, what types of borrowers they’re good for and any standout features.

Funding Circle: Best for low revenue requirement

Funding Circle
4.6

Funding Circle offers business term loans of up to $500,000, which can be used for equipment. Its interest rates start at 7.90 percent, low rates compared to most online lenders which charge rates into the double digits. You can also choose from a wide range of loan terms, ranging from six months to seven years, providing flexibility as you pay back the loan.

Read Bankrate's Expert Funding Circle Review
Interest rate
Starting at 7.90% simple interest
Loan amount
$25k– $500k
Min business annual revenue
$50k

National Funding: Best for equipment leasing

National Funding
4.4

National Funding offers both equipment loans and equipment leasing for new and used equipment, while many lenders only offer equipment loans. You won’t need a down payment to use this lender, a perk that can be useful if you’re looking to purchase a large piece of equipment — like a semi truck. Equipment loan rates start at 4.99 percent simple interest, but that doesn’t include additional fees like its one to three percent origination fee.

Read Bankrate's Expert National Funding Review
Interest rate
Factor Rates Starting at 1.1%
Loan amount
$10k– $500k
Min business annual revenue
$250k

Triton Capital: Best for long preapproval period

Triton Capital
4.3

Triton Capital offers equipment loans with terms ranging from 12 to 60 months. You can get loans anywhere from $10,000 to $500,000, making its loans accessible for small equipment purchases. Many equipment lenders start higher, such as at $25,000. You can also get a flexible payment schedule, choosing between monthly, quarterly, semi-annual or seasonal payments. By comparison, most business loans offer just monthly payments.

Read Bankrate's Expert Triton Capital Review
Interest rate
Starting at 5.99% APR
Loan amount
$10k– $500k
Min business annual revenue
$350k

SMB Compass: Best for large amounts

SMB Compass
4.4

SMB Compass offers an array of business loans, including equipment loans with long terms. While most equipment loans stop at five years, you can get a loan with SMB Compass that stretches to 10. You can also finance without a down payment, and APRs start at 5.99 percent, a low rate for nearly any lender, but especially an online lender.

Read Bankrate's Expert SMB Compass Review
Interest rate
Starting at 7.99%
Loan amount
$25k– $5000k
Min business annual revenue
$300k

Taycor Financial: Best for flexible requirements

Taycor Financial
4.2

Taycor Financial offers multiple business loan options, including equipment loans and term loans. Information about its equipment loans is limited, but its term loans provide a flexible range of loan amounts from $10,000 to $1 million. Typical equipment loans max out at $500,000. You can also get terms as short as four months, while most equipment loans start with one to two years of financing. 

Read Bankrate's Expert Taycor Financial Review
Interest rate
Factor rate from 1.10 - 1.36
Loan amount
$10k– $1000k
Min business annual revenue
$96k

Creditfy: Best for startups

Creditfy
4.7

Creditfy offers attractive equipment loans with high loan sizes of up to $10 million and long terms of up to eight years, according to a spokesperson. Most online lenders stop at $500,000 with terms of five years or less.

Read Bankrate's Expert Creditfy Review
Interest rate
4.90%–22.00%
Loan amount
$10k– $10000k
Min business annual revenue
$100k

Bank of America: Best for established businesses

Bank of America Business
4.3

Bank of America is the second-largest bank in the nation, offering equipment loans, term loans, SBA loans and lines of credit. Its equipment loans offer rates as low as 7 percent with terms of up to five years. While its loan features are common to equipment loans, its low interest rates coupled with in-person service make this bank an ideal and trusted option.

Read Bankrate's Expert Bank of America Review
Interest rate
Starting at 6.75%
Loan amount
$10k– $200k
Min business annual revenue
$100k

What is an equipment loan? 

Business equipment loans are generally a type of term loan that is used to purchase large-scale equipment for business use. Equipment loans might help with purchasing point-of-sale systems, commercial trucks, farming equipment, manufacturing machinery or medical devices. 

Most are secured loans with the equipment you purchase as collateral, meaning the lender can take the equipment if you do not make loan payments. Equipment loans lead to ownership of the equipment, unlike leases which allow you to finance equipment for a number of years before the equipment goes back to the lender. 

How does an equipment loan work? 

You apply like any other type of loan, but in the application, you usually have to specify the equipment you wish to finance. You then get a lump sum of money to acquire that equipment. Depending on the lender and your qualifications, your loan amount could be greater than the purchase price of the equipment to help you cover soft costs, such as delivery or installation. Or you might receive a percentage of the equipment's purchase price, leaving you to cover the rest.

You pay back the loan over the term with interest. The payment schedule can be weekly, monthly or even annually or semi-annually, depending on what the lender allows. Annual and semi-annual payments benefit businesses that make money seasonally, such as farms.

Requirements for an equipment loan 

Requirements vary by lender. Some work with startups and others require at least two years in business. You may also see annual revenue requirements going from $50,000 to $250,000 or more. Personal credit score minimums often fall in the low to mid 600s, though some lenders will take credit scores in the 500s. 

You may also have to show other financial health indicators, such as no recent personal bankruptcies or showing enough cash flow to cover a percentage of the equipment. 

When you apply, you’ll have to provide common business documents like bank statements, tax returns, schedule of business debts and cash flow records.

Types of equipment loan 

There are several types of equipment business loans, including leases and options backed by the SBA. 

Pros and cons of equipment loans 

To help you determine if equipment loans are right for you, below are some pros and cons to consider.

Pros:

  • Quick funding: Lenders are able to process your application and fund your loan quickly. Some are even able to offer same-day funding.
  • Collateral: You typically don't need additional collateral other than the equipment you are financing through the loan.
  • Flexibility: Equipment loans can be a good way to access equipment you otherwise could not afford.
  • Builds credit: Some lenders report payments to credit agencies, which could boost your credit score and help you build business credit.

Cons:

  • Limited financing: You can only use equipment financing to buy or lease a specific piece of equipment for your business. Other costs may require a different loan.
  • Down payment: An equipment loan may require a down payment, sometimes as much as 20 percent of the total cost. 
  • Potentially high rates: Equipment loan rates may be high, especially if you have a low credit score or limited time in business. 
  • Term length: If the equipment fails within a few years, the loan could outlive the asset. Ensure your loan term is shorter than the expected lifespan of the equipment you plan to finance.

Who should get an equipment loan? 

Thanks to their relatively low rates, equipment loans are one of the best ways to purchase equipment you don’t have the liquid funds to buy outright.

Requirements are likely to include:

  • At least two years in business
  • A minimum annual revenue of anywhere between $50,000 and $250,000 or higher
  • A credit score in the good or excellent range
  • Proven cash flow

If you don’t meet these requirements, some lenders work with startups if you can prove personal financial health. 

You may not want to pursue an equipment loan just yet if your record shows a recent bankruptcy, have low annual revenue or a poor personal credit score. 

If you’re a new business and have doubts about your potential revenue, it may be wise to hold off until you have solid projections. Defaulting will damage your credit score and make getting another loan difficult. On the other hand, if you need certain equipment to operate your business, you may not have the option to wait.

Lightbulb

Bankrate Insight

While looking for equipment loans, you may run across scams or just bad contracts. Some red flags to watch out for include:

  • The lender demands you make a decision now without having time to consider everything.
  • The contract terms are vague, or you spot hidden fees.
  • You talk to the lender, and they are not forthcoming in answering questions.
  • Promises of guaranteed approval are fishy, as no reputable lender guarantees approval without review. 
  • When looking for equipment like trucks, you might run into dealership scams, which can use high-pressure sales tactics to push unfavorable loans with higher rates. 

Alternatives to equipment loans 

If you decide a business equipment loan isn’t for you, you can look into alternatives for equipment loans, some of which are even unsecured. 

Where to get equipment loans 

Both traditional and online lenders offer business equipment loans.

Traditional lenders: These include banks and credit unions. Approval requirements tend to be stricter, although interest rates start lower than other lenders. But you can often have face-to-face assistance, and banks are more likely to help you build credit or graduate you to other lending options.

Online lenders: These may include online banks or fintechs. They tend to have less strict requirements since they focus on providing funding to companies that could not get funding elsewhere. But you lose that in-person banking experience.

How to manage an equipment loan 

Managing your business equipment loan after getting approved takes strategic thinking to ensure the loan payments fit your business budget. First, you want to read through the entire loan agreement to make sure you understand all the fees and responsibilities you have for the loan. For example, some loans come with prepayment penalties, so you’d need to weigh the benefits of paying off the loan early if there is a fee. 

You also want to keep detailed records of your updated revenue and expenses, including your loan payment, to make sure that your business is running in the green. Keeping your business budget updated also lets you adjust expenses as revenue rises and falls. Expenses can also include equipment maintenance and repairs, extending the life of your equipment to keep costs low.

Frequently asked questions about equipment loans

How to choose the best equipment loan lender

Bankrate's trusted small business loan industry expertise

Read our full methodology

57

years in business

30

lenders reviewed

22

loan features weighed

770

data points collected

To choose the best equipment financing, we researched banks and online lenders that offered term loans, business lines of credit and other loan types. We looked for lenders with relaxed eligibility requirements and programs that are specifically geared toward helping borrowers with lower credit scores. We considered features that make loans affordable and accessible to businesses with different characteristics and needs, including interest rates, whether the loans are secured or unsecured, minimum annual revenue and fees. Additionally, these lenders were evaluated for notable qualities such as funding speed and nontraditional eligibility criteria.
 
When evaluating lenders, we use a 22-point scale to measure quality in five key areas: